Using ABL To Get Your Business Back on Track
Companies that come to asset-based lenders (ABL) are in some form of distress (e.g., losing money, under-capitalized, growing too quickly) and banks can’t (or won’t) help them. When turning to ABL, make sure that the structure of any ABL financing proposal made to you provides the liquidity and cash flow needed so your business can improve.
ABL instills structure. Financing is tied to assets (accounts receivable, inventory, equipment) and the stringent collateral requirements inherent in ABL force businesses to evaluate and manage their assets more effectively. (You can’t over-borrow as can be the case with banks.) The collateral requirements impose financial discipline which not only encourages responsible financial management but encourages a proactive approach to handling challenging issues.
This forced discipline helps improve receivables turnover and inventory management which leads to more operational efficiency. This will help put the business back on a more successful path and lead to a quicker return to traditional bank financing.
The real trick to using ABL to get your business back on track is to make sure the financing you agree to up front works well with your plan going forward.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.
If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.